Main points of investment:
Event: on the evening of the 19th, Northlatitude released its first-quarter 2017 report. During the reporting period, the company achieved revenue of 134 million, an increase of 144.50% over the same period last year, and a net profit of 29.38 million, an increase of 749.86%. The company continued to improve in the first quarter of 17 years. At the same time, the company announced that it intends to sell its 21.68 per cent stake in Hangzhou Zhangmai through a public transfer, which is expected to increase the company's profits by about 12 million. In addition, the company expects the net profit from January to June 2017 to be about 71.28 million-78 million, a year-on-year increase of 215.51%. 245.26%.
The first-quarter results were in line with expectations, and the transformation of mobile Internet accelerated. During the reporting period, the company achieved a net profit of 29.38 million yuan, an increase of 749.86% over the same period last year, which was consistent with the 724% year-on-year increase of 724% in the previous quarter. Both business income and profitability increased significantly. Since 2016, the company has focused on channel and industrial advantages, stripped of high-input R & D projects and optimized personnel structure, the operation is improving in an all-round way, and profits are expected to accelerate.
Sell the equity of the participating company, thicken the profits, and promote the layout of coordinated development. During the reporting period, the company announced that it planned to sell all its 21.68% stake in Hangzhou Zhangmai through public transfer. In 2008, the company subscribed for a 35% stake in Hangzhou Zhangmeng with 2 million yuan. So far, it has acquired a total of 8.4 million yuan in dividends. The amount of equity transfer is expected to be about 54.42 million yuan. After deducting the cost, the company's net profit is expected to increase by 12 million yuan. Hangzhou Zhangmeng is a mobile application distribution platform, which provides a distribution and promotion channel for mobile application developers, which overlaps with the company's existing business. The sale of Hangzhou holding League not only helps to increase investment income, but also helps the company to optimize its asset structure, further promote the coordinated development layout of the upstream and downstream of the industrial chain, and give full play to industrial advantages.
When the fund-raising project is completed, the income is expected to accelerate growth, raise funds to save surplus and replenish the flow, and improve the financial situation of the operation. As of December 31, 2016, the company's private fund-raising investment projects have been completed, and the revenue generated by the fund-raising projects is expected to accelerate this year. In the process of investment, the company obtains interest income and fund management income totaling 13.7886 million yuan in order to avoid risks and slow down the investment progress of the project. On March 28, the company announced that 13.7786 million yuan of savings raised by non-public offerings will be added to the company's liquidity for the company's daily production and operation activities, which will help to improve the company's financial situation, reduce financial risks, and meet the requirements of the company's long-term development.
The extension strategy continues to advance, and the equity incentive stimulates the efficiency of the company. In March 2017, the "Beiwei Ping an Mobile Internet Industry Fund" invested by the company officially became a Beijing high-tech industry development fund cooperation organization, and the follow-up work will be promoted one after another in accordance with the regulations of the Economic and Information Commission. The company's advantages and achievements in the extension layout are gradually emerging, which will further increase the company's long-term development vitality. In addition, the company's current stock price is 20.3 yuan, and the restricted incentive stock was listed on January 5, 2017. The chairman and senior executives increased their total share capital by 2%, with an average price of 18.84 yuan per share. After the equity incentive, the company is of one mind, the operating efficiency is improved, and the performance growth of the company is accelerated.
Maintain a "buy" rating. Considering the overall improvement and growth of the company's business, we estimate that the company's EPS from 2017 to 2018 will be 0.62 yuan and 0.87 yuan respectively. At present, the company's main business focuses on the distribution of overseas boutique game agents, and the growth momentum of Q1 quarterly report in the past 17 years remains strong; traffic management is steadily advancing, and virtual operators are the first to make profits, especially the early layout of Internet lottery business, which greatly increases the upward flexibility of future performance. As a result, it will be given 50 times PE in 2017, with a six-month target price of 31 yuan, maintaining a "buy" rating.
Main risk factors. Equity transfer and new business development are lower than expected, systematic valuation risk.